Author Topic: Star Citizen - The E.L.E.  (Read 685449 times)

Kastenbrust

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Re: Star Citizen - The E.L.E.
« Reply #840 on: August 18, 2017, 05:26:36 AM »
I don't know. Bank of England base rate is at record low levels, just 0.25%, so with the HUGE amount of collateral offered they may well of gotten less than a single percent interest rate on the loan.

I used to work in merchant banking / general finance in the City of London however left the sector after the financial crisis, although I do still have a lot of friends, contacts and even family members still working there currently. I also worked and managed accounts for large international companies, umbrella corporations and mid-size companies with Coutts before, and can supply proof if need be.

I know for a fact CIG won't be getting a 0.25% loan, simply the fact they were forced to get a loan from Coutts is worrying, for commercial loans it's the bank of last resort because you can get loans way way way cheaper from other commercial banks such as HSBC Business and Barclays Business. People use Coutts for it's privacy and discretion, and pay through the nose for it. Like most commercial banks they have an annual 1% flat management fee for all secured loans (even higher for unsecured ones). This means ontop of the interest rate CIG is paying 1% of the value of the loan every year for the borrowing privilege.

Also the collateral for the loan that CIG have put up is fairly pathetic, they wont own the offices they are developing in and surely have long leases with the landlords (promised future debt, which is priority for repayments) that devalue the assets massively. They don't even have a working finished product, let alone multiple products. It's also a very new company with a huge number of liabilities and only a few income streams which are highly variable, such as the ongoing kickstarter fundraising. There's also the fact that Chris Robert's previous software and film enterprises mostly ended in failure or needed to be brought under financial control by outside bodies such as Microsoft...

They'll be paying top-whack in merchant banking terms for any commercial loan, much higher rates than huge established companies like Coca-Cola and Apple. No doubt they went with Coutts because Chris and Sandi use the bank to hide their substantial personal wealth which I'm lead to believe is in the millions. This is probably why Coutts agreed to lend to them in the first place also, due to their personal history with the bank.

Coutts actually do a specific 1-12 month business bridging loan for tax purposes, which I believe is the specific loan CIG took. It's secured and good for up to 70% max of the estimated value of the company, which gives you an idea how much they think the overall company including all it's assets and minus liabilities is worth. The loan runs at about 2.25%, plus the 1% annual fee (which if CIG pay it off in total within the 12 month period they will only have to pay once). There's also some brokerage and accountancy fees related to initial setup that they have to pay, around a fixed 75,000.

StarBallz

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Re: Star Citizen - The E.L.E.
« Reply #841 on: August 18, 2017, 05:38:50 AM »
Was gonna write the same, most likely they're paying minimum 5-6% interest rate if not more, they're being rated as a high risk company, they got virtually no assets (SC/SQ42 isn't an asset as it's not finished, not even in Beta), an income stream that could dry up immediately or over the next couple of months, that puts them in a bad position to get any good rates offered.

dsmart

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Re: Star Citizen - The E.L.E.
« Reply #842 on: August 18, 2017, 05:42:04 AM »
Meanwhile.... What if CIG focuses on ship sales during the Gamescom presentation?

What do they mean by "what if" ?

Or this one: When CIG inevitably succeeds with SC one day, what will you remember as your biggest concerns about the progress of this project?

Since when is fails spelled succeeds?

Oh yeah, I have been following those too. It's almost as if they're becoming self-aware.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

dsmart

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Re: Star Citizen - The E.L.E.
« Reply #843 on: August 18, 2017, 05:47:33 AM »

Big LOLs for this one, but no surprise to find out that 3.0 is a buggy mess.

In a rare moment of honesty (for CIG) Eric Davis announces at the end of the Burndown that they've gone from 78 blocking bugs (from the last ATV) to 88 !! But with a helpful chart to show how they've magically resolved 8 of them the next day.

The chart even has a nice regression line showing an overall reduction in the number of bugs. Looks like progress until you start doing the maths:

The regression line is over 16 days, starting at 87 bugs to 81 total bugs (estimating 6 cleared overall)
Therefore number of bugs overall cleared per day = 6/16 = 0.375
Therefore an estimate to clear the remaining 81 bugs = 81 / 0.375 = 216 days

ie. to clear all the blockers will take OVER 7 MONTHS  :vince:

Admittedly this comes with caveats, but until CIG release more info then this is all we have to go on right now.

I noticed that too. And yeah, though some bugs take longer than others to fix, your analysis of the maths is correct. I suspect that they will ship 3.0 with bugs in it, as long as they can solve the blockers, hard locks, and some performance issues. I mean, they have about 3K bugs right now in 2.6.3, some of which have been in there for YEARS. And so far, there's no word on the status of those legacy bugs at all.

LOL!!



« Last Edit: August 18, 2017, 06:48:04 AM by dsmart »
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

dsmart

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Re: Star Citizen - The E.L.E.
« Reply #844 on: August 18, 2017, 05:51:15 AM »
The loan does seem to be a strange thing to do I suppose, hastily fluctuating currency markets or not but I'm not an expert in international business finance.

Let's see how long they last. 4 million is what, at most, 2 months operating costs? If they're still here in January then I think we can assume it wasn't a desperate bid to survive but just a way to save a little cash.

Time will tell.

It doesn't work that way. For one thing, we don't know the amount of the loan, and we don't know their actual monthly burn. So I am sure that they will be around in Jan 2018. And even so, that's no indication of financial health because companies can run on fumes for quite some time. Especially in the case of CIG which does appear to be raising income each month, just like a regular company. The issue is that they're burning through more than they can bring in. And that's why, they have to make cuts, rush a game to "release" state etc. Which is precisely what I believe they will do at some point in 2018; if not end of 2017 even.

and the other saved/s money on currency conversion.

That is a complete lie.  Currency conversion is very, very cheap and certainly not more costly that the interest incurred on their loan for said currency conversion.

I don't know. Bank of England base rate is at record low levels, just 0.25%, so with the HUGE amount of collateral offered they may well of gotten less than a single percent interest rate on the loan.

That's nonsense. And it just doesn't work that way. The base rate works the same way it does here in the US, and has no relevance to what they would have received for such a risky loan. Not to mention that even the bank has it's own "rate range" above that.

We've been through this already.
« Last Edit: August 18, 2017, 05:55:26 AM by dsmart »
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

dsmart

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Re: Star Citizen - The E.L.E.
« Reply #845 on: August 18, 2017, 05:58:22 AM »
I don't know. Bank of England base rate is at record low levels, just 0.25%, so with the HUGE amount of collateral offered they may well of gotten less than a single percent interest rate on the loan.

I used to work in merchant banking / general finance in the City of London however left the sector after the financial crisis, although I do still have a lot of friends, contacts and even family members still working there currently. I also worked and managed accounts for large international companies, umbrella corporations and mid-size companies with Coutts before, and can supply proof if need be.

I know for a fact CIG won't be getting a 0.25% loan, simply the fact they were forced to get a loan from Coutts is worrying, for commercial loans it's the bank of last resort because you can get loans way way way cheaper from other commercial banks such as HSBC Business and Barclays Business. People use Coutts for it's privacy and discretion, and pay through the nose for it. Like most commercial banks they have an annual 1% flat management fee for all secured loans (even higher for unsecured ones). This means ontop of the interest rate CIG is paying 1% of the value of the loan every year for the borrowing privilege.

Also the collateral for the loan that CIG have put up is fairly pathetic, they wont own the offices they are developing in and surely have long leases with the landlords (promised future debt, which is priority for repayments) that devalue the assets massively. They don't even have a working finished product, let alone multiple products. It's also a very new company with a huge number of liabilities and only a few income streams which are highly variable, such as the ongoing kickstarter fundraising. There's also the fact that Chris Robert's previous software and film enterprises mostly ended in failure or needed to be brought under financial control by outside bodies such as Microsoft...

They'll be paying top-whack in merchant banking terms for any commercial loan, much higher rates than huge established companies like Coca-Cola and Apple. No doubt they went with Coutts because Chris and Sandi use the bank to hide their substantial personal wealth which I'm lead to believe is in the millions. This is probably why Coutts agreed to lend to them in the first place also, due to their personal history with the bank.

Coutts actually do a specific 1-12 month business bridging loan for tax purposes, which I believe is the specific loan CIG took. It's secured and good for up to 70% max of the estimated value of the company, which gives you an idea how much they think the overall company including all it's assets and minus liabilities is worth. The loan runs at about 2.25%, plus the 1% annual fee (which if CIG pay it off in total within the 12 month period they will only have to pay once). There's also some brokerage and accountancy fees related to initial setup that they have to pay, around a fixed 75,000.

Absolutely spot on. And I mentioned parts of this in my Final Countdown blog actually. The fact that a single Tweet and article (even before I wrote a blog) brought the likes of Ortwin out of hiding - on a Sunday - to address the herd, should have been a sign that this loan was very shifty and suspicious.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

dsmart

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Re: Star Citizen - The E.L.E.
« Reply #846 on: August 18, 2017, 06:48:49 AM »

Big LOLs for this one, but no surprise to find out that 3.0 is a buggy mess.

In a rare moment of honesty (for CIG) Eric Davis announces at the end of the Burndown that they've gone from 78 blocking bugs (from the last ATV) to 88 !! But with a helpful chart to show how they've magically resolved 8 of them the next day.

The chart even has a nice regression line showing an overall reduction in the number of bugs. Looks like progress until you start doing the maths:

The regression line is over 16 days, starting at 87 bugs to 81 total bugs (estimating 6 cleared overall)
Therefore number of bugs overall cleared per day = 6/16 = 0.375
Therefore an estimate to clear the remaining 81 bugs = 81 / 0.375 = 216 days

ie. to clear all the blockers will take OVER 7 MONTHS  :vince:

Admittedly this comes with caveats, but until CIG release more info then this is all we have to go on right now.

I noticed that too. And yeah, though some bugs take longer than others to fix, your analysis of the maths is correct. I suspect that they will ship 3.0 with bugs in it, as long as they can solve the blockers, hard locks, and some performance issues. I mean, they have about 3K bugs right now in 2.6.3, some of which have been in there for YEARS. And so far, there's no word on the status of those legacy bugs at all.

LOL!!





Meanwhile, over there: Spoiler: Burndown Chart - August 17th
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

dsmart

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Re: Star Citizen - The E.L.E.
« Reply #847 on: August 18, 2017, 08:15:38 AM »
The fate of any Star Citizen lawsuit that can't make a case for fraud or similar.
 
Uber wins U.S. court appeal to push price-fixing case to arbitration
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

Spunky Munkee

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Re: Star Citizen - The E.L.E.
« Reply #848 on: August 18, 2017, 12:47:33 PM »
If the BofE was lending out money at .25% I know the Americans would be lining up to get some of that cheap cash. Even 1% they would line up. That is way too cheap. That's lower than the overnight rate that banks charge each other to maintain minimal fractional reserves set by the US Federal Reserve. Yep, American banks would be lining up like hogs at a trough to get some of that cheap money. I don't see how a British bank would serve its investors by not charging the prevailing rates. Regardless...Cheap money drives inflation.

helimoth

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Re: Star Citizen - The E.L.E.
« Reply #849 on: August 18, 2017, 02:24:28 PM »
Especially in the case of CIG which does appear to be raising income each month, just like a regular company. The issue is that they're burning through more than they can bring in. And that's why, they have to make cuts, rush a game to "release" state etc. Which is precisely what I believe they will do at some point in 2018; if not end of 2017 even.

Right now they are still selling a dream and whilst they can maintain the illusion of that dream eventually being realized they will continue to turn over money but something is eventually going to have to give way. They set themselves up for a huge fall with 3.0 and to a lesser extent Squadron 42. If either are released in a state that is anything less than absolute top quality then people are gonna start waking up pretty damn quickly.

N0mad

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Re: Star Citizen - The E.L.E.
« Reply #850 on: August 18, 2017, 02:57:59 PM »
If either are released in a state that is anything less than absolute top quality then people are gonna start waking up pretty damn quickly.

I absolutely agree, but I've always considered CIG to be an art project. People get taken in with flashy visuals and the promise of a game. Even if they manage to debug 3.0 to the point where it's a stable release, how much gameplay will there actually be? Sure, there will be a few missions to random planetary outposts, and a few npcs to shoot, but will there be enough content to spend more than a few hours playing?

You never know - they might surprise us and actually have thought about gameplay for once rather than just the visuals. Seems unlikely.

Serendipity

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Re: Star Citizen - The E.L.E.
« Reply #851 on: August 18, 2017, 04:20:02 PM »
I never saidanyone was lending at .25% gents, that's the base rate of the Bank of England. Lenders will be using a higher rate of course.

http://www.bankofengland.co.uk/Pages/home.aspx

My mortgage is a little over 1% right now. 1.29% from memory.

You can do even better though.

« Last Edit: August 18, 2017, 04:25:47 PM by Serendipity »

helimoth

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Re: Star Citizen - The E.L.E.
« Reply #852 on: August 18, 2017, 05:03:14 PM »
I never saidanyone was lending at .25% gents, that's the base rate of the Bank of England. Lenders will be using a higher rate of course.

http://www.bankofengland.co.uk/Pages/home.aspx

My mortgage is a little over 1% right now. 1.29% from memory.

loool @ comparing a mortgage which is historically one of the least risky loans a bank can give you, which is secured on a tangible asset (the house), with the loan SC got.

You're going to have to do MUCH better than that.
« Last Edit: August 18, 2017, 05:06:28 PM by helimoth »

Serendipity

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Re: Star Citizen - The E.L.E.
« Reply #853 on: August 18, 2017, 10:35:59 PM »
Would you argue that a company generating 30+ million dollars a year for the last 4 or 5 years in a row with the guarantee of a government tax rebate incoming has/is no tangible assets(s)?

Spunky Munkee

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Re: Star Citizen - The E.L.E.
« Reply #854 on: August 18, 2017, 11:03:02 PM »
CIG does not generate any income since they have not actually delivered any of the assets for which they have been paid. They possess intellectual property, that is all, they have a huge liability. They must deliver ostensibly the game which they have promised and will receive nothing for delivering it, they may get added saled once the game is complete if its good and they don't try and bleed the community dry with bullshit fees. Even at this point many people could ask for refunds and fold the company. You say no. If all the US backers asked for refunds CIG would fold. Odds are that won't happen but it COULD. This puts them in a bad situation because they have not actually SOLD anything but dreams. http://dereksmart.org/forum/Smileys/default/emot-gonk.gifYou see, they must deliver in order to satisfy their end of the contract.

So do they actually generate 30 million a year in income? No they have made pre sales, how much income they have made depends largely upon how long it takes them to finish. At this point they may never complete it before interest in the game and the income that has propped it up dries up. That means that their PROFITS may be negative in the end. A company with no profits and lots of liabilities is not one that gets good interest rates. Especially one that is so late to deliver their product line and has such an unsavory reputation in their field.http://dereksmart.org/forum/Smileys/default/emot-smith.gif

I wouldn't lent then 10 cents. The  only asset they are really borrowing against is their tax incentive the crown will hand them, they only needed to prove that they could last long enough to file for it and that they had the right to claim that amount to guarantee that relatively small loan. For the cost of that loan they are locked out of borrowing any more until the loan is satisfied. Desperate move. :reddit:
« Last Edit: August 19, 2017, 05:09:19 AM by dsmart »

 

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